Developing Cross Cultural Capability - Research Proposal Example

Developing Cross Cultural Capability 1.0 Executive Summary Negotiation between two countries of different cultures has always been a challenge for many. This business report presents the importance of both culture and negotiation in relation to the activities that are carried out by countries between each other. Negotiation is a critical skill for both individuals and organizations and is further complicated when the people involved are negotiating across dissimilar cultures. The report provides a description as to how culture generally affects negotiation. It also takes Japan and India as examples of how cultural similarities can be found betwee two countries and recommends about how effectively negotiations can be carried out despite a number of differences. 1.1 Introduction Considering the high failure rates of international mergers and acquisitions and how cultural misunderstandings are often a significant factor in this, the report intends to cover some of the key cultural issues that might arise and specific advice for the company’s managers who will be dealing with negotiators. The objectives of this report are thus two-prong. The first is to present some cultural profiling between two countries, using a range of academic models which should highlight any significant differences that are likely to occur in terms of management behaviour. Second, the report aims to critically evaluate the key communication and negotiation differences that managers should be aware of when dealing with the negotiators when they arrive. Negotiation is generally considered as a means of resolving conflict. It is a process in which problems are solved between two or more parties that attempt to settle some disagreement in a manner that is agreeable to both1. Although the main principles of negotiation are easily understood, it can be extremely difficult when placed into practice. Contention between what is right or wrong; opposing views when it comes to what is fair and just; forms of communication and information exchange as well as the procedures carried out for negotiations are only a handful of the challenges that negotiators often encounter2. Furthermore, the process of negotiation is made difficult when different parties are negotiating across conflicting cultures3. Culture is one of the most powerful factors that determine and influence people’s way of thinking as well as behaviour and communication. 4Therefore, culture has a significant effect on the people’s means of negotiation. This paper specifically examines the impact of culture on the process of negotiation. First, it provides cultural profiling between India and Japan, and identifies differences between their culture and management behaviour. Important factors that are involved in cross cultural negotiation such as communication and negotiation differences are also tackled. In addition, the four dimensions of culture 5have been included, suggesting how culture is integrated into an individual’s values and ways of thinking. The paper also presents an overview of the process of negotiation and describes how culture makes an impact on this. 1.2 Culture: An Overview It is necessary to first describe the concept of culture as the primary purpose of this paper is to identify the impact of culture on negotiations, particularly the issues that may arise between parties during the negotiation. Culture is a product of ideas, beliefs, customs and values that characterize groups and their behaviour6. In addition, culture has defined through a number of ideas: 1) culture is not a personal or individualistic trait, rather it is societal; 2) it is acquired and is not inherent; and 3) its characteristics include the entire group of social life7. Four dimensions of culture have also been identified for the purpose of classifying people in various countries and their ways of understanding and translating their cultural environment. These are: 1) power distance, 2) individualism and collectivism, 3) masculinity-femininity, and 4) uncertainty avoidance. Power distance refers to “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally”. Power distance measures the relationships that exist between individuals that belong to different statuses in a cultural setting 8. For example, in countries that have a high power distance index (PDI) such as the Arab countries, inequality among people is typical and is expected; bosses expect complete obedience from subordinates and subordinates expect to be told by their superiors. On the other hand, Japan, Australia and other countries that have a low PDI believe that inequality among individuals should be significantly reduced. Furthermore, those who hold higher positions in organisations and society in general expect that their subordinates should give them feedback and reactions; correspondingly, their subordinates also expect that their superiors will consult them and asked for input. The second dimension of culture is individualism which, when used as an index, refers to the degree to which the people living in a region learn to communicate and interact with each other9. Countries where the group’s interest is more important than the individual’s interest, are referred to as collectivist societies. An opposite trait has also been identified which is individualism, referring to a society in which a person is expected to care for and look after himself and his family instead of watching over his group to obtain loyalty from fellow members. For example, in regions where the individualism index (IDV) is high, an individual grows up to look after himself. That is, identity is based on the person himself and tasks are normally viewed as more important than relationships. In contrast, those who have a low IDV and are more focused on a collectivist approach (in which a person places emphasis on looking after extended families) bases his identity on social networks, and places greater premium on relationships than on tasks. The next cultural dimension, masculinity-femininity, is based upon the most suitable roles for each gender in a particular culture. Masculinity refers to a trait where society’s gender roles are socially and clearly distinct; men are thought of as firm, forceful and focused on the acquisition of material things, while women are expected to be gentle, reserved and concerned with the quality of life10. For instance, countries that have a low masculinity index (MAS) place greater emphasis on people and relationships and primary values include care and preservation. On the contrary, those having a high (MAS) are more focused on money and material things, regarding material success as a dominant value in society. Finally, the fourth dimension of culture that has been recognized is uncertainty avoidance, which supposes that great uncertainty leads to intense anxiety11. Each human society makes use of various means and processes to reduce anxiety, particularly in their laws, religion, and technology. Ambiguity is the primary cause of uncertainty avoidance, and cultures that scored high on the uncertainty avoidance index (UAI) and have a low tolerance for ambiguity feel that uncertainty is a threat that will continue putting them at risk when it is not fought. Moreover, the level of stress is particularly high in these countries and numerous laws and rules are implemented because they aim for security. Those with a lower UAI or a higher tolerance for ambiguity believe that uncertainty is normal and therefore maintain a low level of stress. They are also comfortable in doubtful situations, implement fewer policies, and have a strong desire for opportunities. 1.3 Negotiation: An Overview Values, beliefs and attitudes are significantly determined by one’s culture; however, the degree of its impact on the process of negotiation has been difficult to estimate12. Therefore, it is also worthwhile discussing the concept of negotiation. This portion of the report describes how negotiations are used as a means of resolving conflicts by defining the process of negotiation as well as the skills that are necessary in negotiators and how culture generally affects negotiation. Negotiation is a process that requires joint decision making through which parties turn their conflicting interests into a mutually acceptable settlement. Therefore, in each party involved, cooperation is necessary to attain all desired goals; though a party is capable of preventing the other from achieving his or her objective13. Furthermore, when parties depend on each other, it establishes a mixed-motive relationship where they become involved to accomplish different outcomes. Generally, negotiation is categorized into three types: 1) competitive, 2) collaborative and/or 3) concession (Pruitt 2002). Due to the fact that a competitive style of negotiation allows maximum value and advantage at the expense of the other group, it has been referred to as the win-lose approach. The second style of negotiation, which is the collaborative style, incorporates the value of solving problems, bargaining and establishing merit between all parties. Moreover, it makes an attempt in reaching an agreement by means of creating options which can be favorable in achieving and making the most of the objectives of all parties involved, therefore making way for a “win-win” situation. Finally, in the concession style of negotiation, one party lowers their position in order for the other party to gain an advantage over them, thus being referred to as the “lose-win” approach 14. Negotiations are carried out in different styles as the process reflects different parties struggling for conflicting interests and objectives. During the first stage of negotiation when parties make an effort to influence the development of the process, gather information, and establish limitations, it is likely that a competitive environment will exist unless such matters are resolved15. The primary aim of negotiations is to achieve a decision or outcome that is agreed upon and considered acceptable by both parties and for this reason, the most useful and effective form of negotiation falls under the problem-solving approach in which collaboration is integrated. In order to deliberate on the decision or outcome of a negotiation, the value that is achieved can be described as “created value” or “claimed value”16. To create value is a procedure in which parties are highly cooperative as they try to determine and make the most of the possible benefits of such relationship. In contrary, to claim value is generally a competitive process. The most important way of negotiation is to create value such as seeking interests that are common and complementary for all parties as well as developing upon such interests to come up with a win-win situation. In the latter, every party acquires benefits, which is quite the opposite of a win-lose situation. For parties to work in a manner that is acceptable to all, they must be capable of establishing an environment that encourages collaboration. Moreover, there should be a number of factors that can expedite goal achievement, such as a mutual confidence in their abilities to solve problems; awareness and understanding of each party’s position and point of view; willingness to work towards a resolution that is favorable to all; trust and reliance on all sides; as well as effective communications 17 Essential components of negotiation will significantly influence one’s ability to negotiate and such components ascertain the impact of culture on the negotiation process18. Two countries, India and Japan, are compared and contrasted in terms of their culture and how these affect their management behaviour. 1.4 Indian Culture and Its Effect on Management Before it can be determined as to how India and Japan can share their similarities or have cultural crashes with their differences, it is very important that Indian culture is first examined. Majority of India takes on an Indian business culture that is very diverse; therefore, in dealing with this culture, it is important to be aware of the diversity across sectors, regions and communities. Many Indian businesses are either owned by families or different community members and although many such businesses are relatively modern when it comes to their operations and performance and follows international norms and standards, they have peculiar, specific community cultures19. There are also significant differences between private and public sector companies. Those that are owned by the government are arranged in a formally ranked order and rules are rigidly applied in their system; on the other hand, their counterparts in the private sector are more flexible, democratic and unrestricted. Additionally, there are regional differences when it comes to Indian business etiquette as southern Indian companies are viewed to be more conservative and traditionalist compared to those from the west or northern part of India, who are more aggressive and individualistic in terms of behaviour. Indian culture places great emphasis on nationalism and focuses on passionate devotion to their country and its interests above all others20. Because heritage and cultural tradition has become a strong driver of influence, strong cultural frames including close family bonds and conformity to traditions have affected the managerial approach and state of mind of majority of Indian businesses. In the country’s business environment, joint ventures as well as collaborations with foreign countries are not new as well-known companies from Europe, America and Asia have been negotiating and establishing business relations with India for more than a few decades now. Therefore, if one is representing a distinguished international company, he will find that Indians are very open and comfortable in negotiations, and it is not necessary for an intermediary to establish their proof of ability and trustworthiness. The administrative system as well as the laws implemented in India is somewhat complex and difficult to manage 21. The process of creating and passing laws are also considerably different across the country and it is therefore recommended to have a coordinator who can help in dealing with such details and issues. Moreover, when it comes to societal values, though there have been gradual changes, the practice of religious rituals as well as respect for age and loyalty to family remain to be observed by many Indians, even in work settings. Executives who belong to the female population are somewhat a new occurrence in the business environment of India. People are normally respectful towards women who are working in businesses, though they may not be comfortable when working with females for business deals. Moreover, cultural heritage remains strong as the concept of “Nishkama karma” or being loyal and devoted to work without considering results has been supported by majority of Indian business leaders. Indian culture and values have been strongly integrated and a number of cultural components have been influencing the Indian work settings for years now such as high paternalism, greater focus on stability and security, strong masculine values, acknowledgment and recognition, spirituality, as well as highly emotional behavioural norms22. 1.5 Japanese Culture and Its Effects on Management Aside from India, it is also necessary that the culture of Japan is recognized to determine any similarities or differences between the two countries in order to make the preparations for a successful negotiation. As known by many, Japan gained tremendous success after the second World War and because of such, researchers have paid great attention to understanding how their success came about by means of various models and theories. To summarize the theories on the main factors that have driven Japan to achieve constant growth and development, a framework provided by McKinsey & Company to develop their own model of seven management variables has been used which include seven S’s- strategy, structure, system, staff, skills, style, and super ordinate goals 23. These have been further categorized into two- the hard S’s which are more impersonal. These include the structure, system, and strategy, and the soft S’s which are more concerned about interpersonal issues and human values include skills, staff and style. There may be numerous reasons behind Japan’s growth and success but these are mostly rooted in their culture. They also identified the factors that contribute toward Japan’s effective management practices including collective responsibility, commitment to lifetime employment, and long-run planning horizon24. Japanese management practices are generally influenced by culture, including a collective mentality, determination and diligence especially in times of difficulty as well as greater emphasis on social reciprocity that has become the primary principle when establishing relationships. Social reciprocity is also exemplified in the fact that Japanese employees are expected to stay for a long time in their organisations and expect lifelong job security in return. Moreover, the belief of Japanese people in ‘wa’, which refers to harmony, is often used to help organisations in making decisions. 1.6 Key Differences Cultural Negotiations between India and Japan In relation to the dimensions of culture, similarities and differences have been identified between India and Japan, as illustrated: In the first category, the Power Development Index (PDI), India acquired a higher score compared to Japan which goes to show that inequality among Indian individuals are expected and that bosses expect complete obedience from their subordinates. On the other hand, Japan scored a lower figure than India. Next, the Individualism Index (IDV) scores showed a similarity between the two countries as they acquired almost the same scores. These are not extremely high scores which show a balance between an individualist and a collectivist approach. The next scores on cultural dimension of masculinity-femininity (MAS) show that Japan acquired a higher figure than India, which goes to show that the Japanese individuals are more focused on achieving money and material success in general. Similarly Japan scored higher in the uncertainty avoidance index (UAI) than India which means that the Japanese would want to be sure and certain in everything that they do, as their level of stress is increased when there is vagueness and uncertainty when dealing with things. Finally, Japan still scored higher than India when it comes to Long Term Orientation; therefore Japanese people focus more on thrift and perseverance as well as persistent actions while Indians gain satisfaction in quick results and believe that money that is earned should already be spent. As identified by the graph, there are more differences between the Japanese and Indian culture than similarities and it will be a challenge to address each and every component. For example, when communicating, Indians call for a more formal structure and means of agreement compared to the Japanese as seen in the PDI. Furthermore, when doing business, the Japanese are more assertive and task-oriented compared to the Indians who may be more nurturing and relationally oriented. The Japanese are also more persuasive regardless of any difficult situation and they want to have certainty in all things; the Indians, though, are comfortable in doubtful situations and are more likely to focus on opportunities that can bring significant potential. Finally, with term oriented culture as Japan, it is necessary that lengthy meetings or discussions are carried out to ensure the long pursuit of goals. The Indians, on the other hand, are contented when they achieve short-term goals. Dimensions of culture that are combined with negotiation elements as well as the effect of culture on negotiation styles demonstrate that culture does have an influence on the process of negotiation. Understanding the effects of culture can significantly improve and facilitate this process 25Two of the biggest challenges are to understand that cultural differences are more likely to be a large influence in the process of negotiation, and to develop a strategy that can appropriately correspond to the cultural conditions of such events as perceived by the parties involved. Two important elements must be kept in mind. First is the definition of negotiation with which it is necessary to understand that the main purpose of negotiations is to resolve conflict and that all parties come up with a mutual and agreeable decision. Second, each party that is involved in the negotiation must have their own independent interests and bring skills and capabilities that are necessary in addressing their issues. It is, therefore, extremely important that a relevant component in developing a cross-cultural strategy for negotiation is utilized, and that is preparation. Firstly, aside from analysing the present issues that have encouraged parties to negotiate, it is strongly suggested to study and learn as much as possible about the other’s culture and history26.It is also as important that the negotiator is fully aware and has completely understood his own cultural tendencies and behaviours. These are all exemplified in the graph that was used in relation to the concept of cultural dimensions. This is relevant in identifying any possible similarities or differences in terms of culture that are evident during the process of negotiation. Eventually, when a relationship is established with the other negotiators involved, it will allow all parties to look for a common foundation in which to develop a relationship, a technique to bridge all gaps. When the negotiators are capable of gathering information regarding the cultural conditions as well as preparing the environment and establishing relationships, it will have a significant impact on achieving the objectives that the parties intend to address. For example, by fully understanding how a certain culture moves are directed towards its interests is useful information to gain. However, the most challenging cross cultural issue when it comes to negotiating is that of values27, and to create a cultural bridge can be done when one party demonstrates interest as well as establishes respect for the other’s culture. 1.7 Conclusion The process of negotiation is important in conflict resolution when all parties involved share a commitment in order to reach a desired outcome that can satisfy the needs and interests of everyone involved. To consider culture in negotiating is also relevant as each negotiator holds certain cultural behaviours that may be different from the others, including their way of thinking, feeling, behaving, and most especially their values. Negotiation is different from other conflict resolution procedures in that when it is properly carried out, the parties involved direct their various interests towards an agreement that is mutually acceptable to all. Therefore, using the information presented in this report, it is necessary for everyone involved in the process to understand each other’s viewpoint and position, building trust, and communicating effectively with each other for them to acquire such agreement. When the implications of culture are understood, it is more likely that any negotiator can prepare and come up with the most favorable solution for all parties involved. Moreover, the culture of each party has a tendency to influence the negotiation, the processes to be integrated, as well as the means of communication and interaction in order for all parties to come up with a mutual agreement. 1.8 Recommendations In the upcoming international meeting between Japan and India, these cultural differences that have been identified may cause every action or behavior to clash. I believe that everything should start and end inside the corporate meeting area because it is the place where etiquette, values, rules and conduct are all visible to all participants. Despite differences, a number of factors can still be adjusted prior to the meeting such as time. I suggest that the correct and exact time of the meeting should be made known to all parties so there should be a reason why everyone should be punctual. However, in relation to some components, we can never be truly prepared if we do not study or undergo a training program to understand the other country’s culture. Therefore, I suggest that in both preparing and running the meeting, it is extremely necessary that we should go through a short training program with which every detail will be discussed from the purpose of the meetings (What is our real agenda in this meeting- to set up business or to strengthen our bonds?) to its nature (How has the other country acted before in previous meetings?). Expectations in meetings must be also made clear; therefore I suggest that we should contact all participants and discuss this meeting as well as what we require from each person. If it is ready, then the agenda must be sent as well for everyone to be fully prepared and aware. It would also be ideal if each participant brings at least a number of suggestions with them to contribute in the meeting. Also, we should let each participant know what we and other people would like to hear from them. Taking a relaxed approach during meetings would also be ideal; allow each participant to become comfortable during this time. For example, the use of warm-ups or ice breakers will most likely release tension in the meeting. Traditionally, in most meetings, those who come from the same country or culture are grouped; I suggest that we do a mix-up of people, Japanese and Indian people together, because once we are all comfortable in our groups, we can slip into our normal cultural patterns. This way, we are able to develop and strengthen cultural relationships and staff bonds. More importantly, the topics during the meeting should be sent clearly to each attendant and that their meanings are understood by all as different interpretations can always cause confusion during and after the meeting. At the end of this meeting, it is expected that all agreements and disagreements are noted down and summarized while ensuring the satisfaction of each participant. References 1. Fisher, R, Ury, W, & Patton, B 1991, Getting to yes: negotiating agreement without giving in, Houghton Mifflin, New York. 2. Susskind, L, McKearnan, S & Thomas-Larmer, J 1999, The consensus-building handbook: a comprehensive guide to reaching agreement, SAGE Publications, Thousand Oaks. 3. Gelfand, M, & Brett, J 2004, The handbook of negotiation and culture, Stanford University Press, Stanford. 4. 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